Weighted Average Cost of Capital: Net Present Value (Answer 7 OR 8. 40 points) 7. Given the information below, should the firm undertake the proposed project? If so, by hos much should the project increase the firm's value? Expected length of project = 5 years Market yield on debt with similar risk to the company's debt: 5% Risk-free rate of retum rr=2% Required rate of return on the market re-12% Beta 1.15 Annual dividend on preferred stock = $3 Current price of preferred stock = $30 Expected capital structure of: Debt: 50% Preferred equity: 15% Common equity: 35% Tax rate 35% Expected future cash flows are as follows: Year 0 1 2 3 4 5 u N FCF $(100,000.00) $ 25,000.00 $ 30,000.00 $ 35,000.00 $ 45,000.00 $ 65,000.00